ANZ-Roy Morgan New Zealand Consumer Confidence – Feeling positive – up 5.7pts to 107.2 in January

• ANZ-Roy Morgan New Zealand Consumer Confidence lifted from 101.5 to 107.2 in January, the highest level since August 2021.

• The proportion of households thinking it’s a good time to buy a major household item (the best retail indicator) rose 2 points to +1 – the first time it's been net positive in nearly four years.

• Inflation expectations were steady at 4.6%

Turning to the detail (see charts on page 4 of the linked PDF):

• The future conditions index made up of forward-looking questions lifted from 108.9 to 113.5, the highest level since May 2021. The current conditions index rose very sharply from 90.4 to 97.7, the highest since December 2021.

• Net perceptions of current personal financial situations (better or worse off than last year) rose 12 points from -18% to -6% with 31% of New Zealanders (up 5% points) saying they are 'better off' financially than this time a year ago compared to 36% (down a large 8% points) saying they are 'worse off' financially. The results on this question confirm that the rise in confidence is based on the experience here and now rather than hopes.

• On the hope front, a net 29% of respondents expect to be better off this time next year, up 7 points to the highest level since April 2021. This is driven by almost half, 47% (up 4% points) of respondents who expect to be 'better off' financially this time next year compared to only 18% (down 3% points) who expect to be 'worse off'.

• In further good news, a net 1% think it’s a good time to buy a major household item, back in the black finally! This positive result is driven by 41% (up 2% points) of New Zealanders saying it's a 'good time to buy' major household items compared to 40% (unchanged) that say it's a 'bad time to buy' major household items. This is the first positive result for this index for four-and-a-half years since August 2021.

• Perceptions regarding the economic outlook over the next 12 months lifted 5 points to -1%. The 5-year-ahead measure rose 1 point to +12%.

• House price inflation expectations eased from 4.0% to 3.7%, giving up last month’s gains. Wellington continues to drag the chain (2.5%).

• Two-year-ahead CPI inflation expectations were unchanged at 4.6%. In the recent Q4 CPI data food price inflation was 4.3% y/y and household energy 12.2% y/y, so it's entirely understandable that expectations are higher than the current official CPI rate of inflation (3.1%).

Figure 2 in the linked PDF shows the net percentage of consumers saying it’s a good time to buy a major item split by whether the respondent has a mortgage or not (the latter group being a mix of those who have paid a mortgage off, and renters). Mortgage holders remain more cautious, and their enthusiasm increased by less in January. This will be a key series to watch to help gauge whether the turnaround in the direction of interest rates is biting.